Posted by Jennifer Nelson on October 13, 2010 under Small Biz and Entrepreneurship,Small Biz Certifications,Small Biz Startup | Be the First to Comment

Across the nation, 5.7% of all adult women are entrepreneurs. Approximately 64% of women, with personal net worth of at least $5 million, created their wealth through professional careers. That’s good news for today’s up-and-coming female entrepreneurs looking to open their own business.

The number of women owned businesses continues to grow at twice the rate of all U.S. firms (23% vs. 9%). There are an estimated 10 million women-owned, privately-held U.S. businesses. Sectors where women owned businesses are making exceptional strides over the past 10 years include Wholesale trade 283.4% growth, Health Care & Social Assistance Services 130.0% growth, Arts, Entertainment & Recreation Services 116.8% growth, and Professional, Scientific, & Technical Services 82.7% growth. According to the Center for Women’s Business Research, women employ 12.8 million workers, or one in every seven employees.

Women start a business for both lifestyle and financial reasons. Many female business owners run businesses from home to keep overhead low. Women, like their male counterparts, understand the value of flexibility, empowerment, and challenge inherent in owning and operating a small business. Increasingly, employers will compete with this option for talented female employees, as women grow even more confident in being their own boss.

Male and female priorities for businesses are often unique. A recent study found that 79% of women business owners are concerned when selling their business about the buyer’s plans for the business compared to 52% of men. Women are also more concerned with passing on their businesses to their daughters than their male counterparts (30% vs. 11%) are. Women who start a business are less likely to have a college degree in their specific industry, or first-profession degree, than are male entrepreneurs. They are also less likely to get a job in a Ph.D.-related field. Women are also more likely than their male counterparts to take advice, an important skill needed as a new small business owner.

The majority of women business owners in nontraditional industries (85%) believe there is no disadvantage to being a woman or that it is actually beneficial. This is particularly true when setting up an official woman owned business that applies for government contracts.

Federal law requires that certified WBE women owned businesses receive at least 5% of all Federal contracts, yet less than 3.2% of all contracts are awarded to women. While some people might find this statistic discouraging, in the eyes of this author that shows there is 1.4% or over $6 Billion in untapped moneys targeted at women business owners who are ready and able to meet the governments needs. This is particularly true in four consistently female under-represented businesses: Cabinet Making, Coating and Engraving, National Security and International Affairs, and Other Motor Vehicle Dealers (i.e. all terrain vehicles).  While there is much to gain from obtaining WBE certification it is not a process to enter into lightly and may be in the best interest of the firm to seek assistance from a professional to further understand qualifications and requirements.

Some difficulties for businesses are constant regardless of gender. The greatest challenge for women-owned firms is access to capital, credit, and equity. Over two-thirds of women owned businesses reported barriers to working with banks. About 76% of women owned businesses financed their start-up with personal capital. Women are three times more likely to utilize credit cards for short-term financing than their male counterparts are. Only 60% of female business owners turn to banks for long-term capital financing at all, leaving a large 40% market of untapped resources for banks.

While bank financing can prove difficult for women, things are not as gloomy as they appear at first glance. Over half of all women business owners (57%) have a line of credit for their business and 41% have a commercial bank loan. Many women business owners are better at establishing sustainable growth because they rely on using business earnings or private sources for both short-term and long-term capital needs keeping them out of unneeded debt.

Having bank financing or a line of credit is important for all business owners regardless of gender and a business plan in the fundamental first step to begin applying for bank capital. Women like their male counterparts, are taking the steps they need to achieve proper capital and financing through banks and avoiding the higher interest rates offered by credit cards.

In conclusion, whether a woman or male entrepreneur, the tasks and obstacles they will face in many cases will be similar, it is how they overcome these hurdles that will define the success of their business.  If you start a business, no matter the type, it will always be critical to do the heavy-lifting of research and business plan development.